## Facts

- G.D.F., Inc. leased space in a Virginia shopping center from Providence Square Associates, LLC to operate a Rite Aid drugstore as an anchor tenant.
- The lease granted G.D.F. exclusive rights within the shopping center to operate a “drug store” and to conduct a photo-finishing business.
- Providence Square later leased space to Hannaford Bros. Co., which opened a full-service supermarket.
- Hannaford’s supermarket included an in-store pharmacy department and offered a photo-processing drop box for off-site photo finishing.
- G.D.F. claimed Hannaford’s operations caused a decline in Rite Aid sales and alleged Providence Square breached the lease’s exclusivity provisions by allowing competing pharmacy and photo services.

## Issues

1. Whether a lease provision granting exclusive rights to operate a “drug store” prohibits a landlord from leasing to a supermarket that operates an in-store pharmacy.
2. Whether exclusivity for photo-finishing services is violated by a supermarket’s photo-processing drop box for off-site processing.
3. Whether interpretation of the lease exclusivity provisions presented a question of law permitting summary judgment.

## Decision

- The Fourth Circuit affirmed the district court’s grant of summary judgment for Providence Square and Hannaford.
- The court held that a supermarket with an in-store pharmacy is not, by that fact alone, a “drug store” within the meaning of the lease’s exclusivity clause.
- The court held that a photo drop box offered as an ancillary service did not violate the lease’s photo-finishing exclusivity.
- Because the material facts about Hannaford’s operations were not genuinely disputed and the dispute turned on lease interpretation, summary judgment was proper.

## Legal Principles

- Exclusive-use provisions and other restrictive covenants in commercial leases are construed strictly and narrowly and are not extended by implication beyond their clear terms.
- Undefined business descriptors (e.g., “drug store”) are interpreted according to ordinary commercial meaning, commonly focusing on the tenant’s principal business rather than incidental departments or services.
- A tenant alleging exclusivity must show the challenged use falls within the prohibition as written; economic harm from competition does not establish breach absent contractual language granting protection from that competition.
- Where the relevant conduct is undisputed and the dispute concerns contract interpretation, courts may resolve the case as a matter of law on summary judgment.

## Conclusion

The court enforced the lease exclusivity provisions according to their ordinary meaning and narrow construction, concluding that a supermarket’s pharmacy department and photo drop box did not convert the supermarket into a prohibited “drug store” or photo-finishing business; therefore, the landlord did not breach the lease and summary judgment was affirmed.


Providence Square Assocs., LLC v. G.D.F., Inc., 211 F.3d 846 (4th Cir. 2000)